Domestic Affairs

On Nov. 6, 1999, 55% of Australians voted against the country’s becoming a republic with a president “appointed by a two-thirds majority of the members of the Commonwealth Parliament.” An eight-week-long election-style media campaign failed to persuade Australians to cut the link with the British monarchy. In the U.K. The Sunday Times described the election result as a Pyrrhic victory and suggested that the royal family go before they were pushed. Prime Minister John Howard of the Liberal Party of Australia (LPA) was delighted by the result but warned his pro-republic colleagues that they would have to toe the line on the issue and cease to campaign actively for change.

The Australian newspaper pointed out that the voting revealed a nation split between city and country, inner and outer suburbs, and high- and low-income earners. The divisions cut across party lines, with some of the safest LPA seats (including the prime minister’s) voting for the republic and many of the opposition Australian Labor Party (ALP) seats determined to keep the links with the British crown, despite ALP leader Kim Beazley’s adamant crusade for an Australian as head of state.

Within the conservative wing of the Liberal Party, republicans were split between the followers of the treasurer, Peter Costello, who favoured minimal change, and the workplace relations minister, Peter Reith, who supported direct elections. Martin Cameron, a former state of South Australia Liberal Party president not muzzled by the prime minister’s instruction, claimed that many Liberals were furious with the failure of the “yes” case and pointed out the absurdity of saying that while politicians were trusted to run the whole country, they could not be trusted to select or elect a president.

New South Wales Premier Bob Carr said the description of the head of state as president put people off voting for a republic in the referendum. Carr argued that it was difficult for voters to grasp that under the republic model the president would hold only symbolic power and observed that if the proposed changes had signaled installing the governor-general as head of state, the referendum result would have been different.

Beazley promised that if Labor won the next election, a plebiscite would be held to determine if Australia should become a republic; if it passed, a second plebiscite would be held in which voters could choose between direct-election and parliamentary-appointed republican models. Under Beazley’s plan the version that won would then go to a referendum to change the constitution.

While the nation was deeply divided over the republic issue, the hostility to a proposed preamble to the constitution was clearer, with 61% voting against a change that would have included a statement honouring Aboriginals and Torres Strait Islanders as the nation’s first people.

Australian immigration authorities faced an escalation of illegal arrivals attracted by rumours in their home countries of easily available work on such construction projects as the 2000 Olympic Games in Sydney. By mid-1999 the detention centre for boat people at Port Hedland, W.Aus., was filled to the bursting point. In November the Darwin-based navy patrol boat HMAS Dubbo detained an Indonesian interisland ferry smuggling more than 350 men, women, and children, mostly from Iraq, Afghanistan, and Iran. In an attempt to discourage the unwanted traffic, the immigration minister, Phillip Ruddock, visited China to coordinate policy with the Chinese government.

The Economy

Although the Reserve Bank increased interest rates by 0.25% in November (the first upward move in official rates in five years), the Howard government’s economic strategy proved overwhelmingly successful in 1999. The crown jewel of the government’s economic policy was its success in passing new laws to give Australians a consumption tax, a policy signaled in the 1998 election campaign. The government had tried for 25 years to replace a wholesale tax with a broadly based consumption tax but found it difficult to accomplish because it lacked a majority in the Senate. Howard and the Australian Democrats agreed on a deal under which Australia was to get a 10% tax on all goods and services except basic food.

Australia weathered the Asian economic downturn with rising domestic demand and export market development. Net public-sector external debt fell from a peak of 87% in 1994 to 35% in 1999. Inflation remained low, unemployment fell, and the sale of more of Telstra, the government-owned telecommunications giant, helped to boost Australia’s reserves and retire foreign debt. Nevertheless, in the second half of the year, danger signs were apparent as the high rate of domestic growth continued to increase imports, and the balance of payments deficit ballooned to 6% of gross national product.

Foreign Affairs

Australia faced several difficult foreign policy issues in 1999 as a result of the crisis in the Balkans. In March two Australian aid workers were arrested on charges of spying in Yugoslavia. Steve Pratt and Peter Wallace of CARE Australia were put on trial, convicted, and sentenced to long terms of imprisonment. They served five months in a Yugoslav jail before Serbs in Australia joined with former Australian prime minister Malcolm Fraser to persuade Yugoslav Pres. Slobodan Milosevic to release them. Australia also accepted thousands of ethnic Albanian refugees who had fled the fighting in Kosovo. While in theory the refugees were to return to Kosovo once the hostilities were over, many preferred to remain in Australia rather than face the harsh European winter in a homeland bereft of infrastructure. Howard personally greeted a group of the first Kosovar families and, in a moving moment under the wings of a Qantas Airways jet at the airport in Sydney, said that Australia extended its arms to them in welcome.

A new foreign policy era opened for Australia in September when, for the first time since the Vietnam War, Australians sent ground forces to Asia. Former Australian prime minister Bob Hawke warned that Australia would find “another Kosovo” on its doorstep unless the Indonesian military stopped arming anti-independence militiamen in East Timor. Howard initially said that it would be foolish to draw analogies between East Timor and Yugoslavia, but his government was soon forced to admit that disturbances in East Timor threatened regional security. In a kaleidoscope of dramatic developments, Howard held talks in Bali with Indonesian Pres. B.J. Habibie and repeated Australia’s bipartisan support for East Timor’s remaining part of Indonesia. Within months the government changed tack, however, and indicated Australia’s willingness to assist in the development of an independent East Timor, should that be the wish of the East Timorese. In the rapidly deteriorating situation during the August–September referendum on independence for East Timor, Australians initially supported Indonesia’s handling of the difficult process, sending observers to oversee the election under UN auspices. When brutal rampages by militiamen broke out after the referendum was decided, Australian public opinion boiled over. Military aircraft operating out of Darwin made numerous rescue flights into Dili, the East Timorese capital, evacuating UN personnel and local civilians and police. In mid-September the UN Security Council approved intervention in East Timor by an Australian-led international peacekeeping force, which took control of the region on September 27.